The East Coast blizzard left many disconnected with the real world this week, but it could be worse. Nauru, a tiny island in the southwest Pacific, has been cut off from the outside world for more than a month.

Its entire telecommunications network collapsed on Jan. 8 in the midst of a power struggle for the presidency. The 8-square-mile island with a population of 12,000 is so disconnected that the world doesn't even know who won. Reports indicate the presidential residence was burned to the ground in January, but no one knows for sure.

What's worse, Nauru is completely broke. Its once lucrative phosphate mines have dried up, leaving the island a barren wasteland.

OK, another frozen pizza for dinner isn't that bad.

In today's Motley Fool Take:

Wachovia , Prudential Team Up

Despite the difficulty Wachovia(NYSE: WB) (formerly First Union) has had integrating its past acquisitions (including CoreStates Bank and The Money Store), the merger machine recently announced plans to create a joint venture with Prudential Financial(NYSE: PRU).

By coupling their resources to create the third-largest brokerage behind only Merrill Lynch(NYSE: MER) and Citigroup's(NYSE: C) Salomon Smith Barney unit, they hope to better compete with the largest players on Wall Street.

But the decision comes at a time when most large firms are scaling back their brokerage operations significantly. Merrill Lynch has slashed its brokerage division by nearly 35% since its 2000 peak, and Prudential itself has reduced its group by 26%.

It seems Wachovia is betting big to gain scale in a notoriously competitive business in this most miserable of markets. The venture does fit the bank's growth strategy; it's the only large player to grow its brokerage division in the past year (by around 2%). It's difficult, however, to say how good a deal Wachovia has made. No money will change hands, but the bank will own 62% of the new firm. But one would expect that because it's contributing far more resources to the venture, nearly twice the number of brokers at Prudential (8,109 vs. 4,377).

The estimated cost savings of $220 million through 2005 disappears when you consider the new company will take an after-tax charge of $681 million over 18 months in relation to the venture. It's also been fairly well-known for nearly a year that Prudential has been looking to sell or spin off its brokerage division.

Wachovia could have negotiated a better deal, especially when one considers overall brokerage revenues are down as much as 50% at large firms.

In the end, it really depends on which economic forecast you subscribe to. Wachovia's bet could pay off if the brokerage industry makes a strong comeback, and at present, it's prepared to bank on that being the case.

FCC Ruling Dings Bells

The Federal Communications Commission handed down a decision yesterday that could mean more competition among local phone providers, less competition in the broadband sector, and a deterioration of Chairman Michael Powell's influence.

Last month, Powell proposed that the Baby Bells -- Verizon(NYSE: VZ), BellSouth(NYSE: BLS), SBC(NYSE: SBC), and Qwest(NYSE: Q) -- no longer be required to rent their voice networks to competitors at wholesale rates. That was a blow to long-distance giants AT&T(NYSE: T) and WorldCom, who were seeking to expand their relatively meager local offerings.

The problem for Powell, however, is he never had the full backing of his colleagues. Unable to sway fellow Republican Kevin Martin, Powell was forced to dissent on an alternative proposal that passed by a 3-2 vote. (Martin's vote prompted an embarrassingly melodramatic response from Rep. Billy Tauzin (R-La.), who accused him of being a "renegade" leading a "palace coup.")

But while the new ruling still requires low-cost rental of voice lines (or at least keeps the power to decide in states' hands), the Baby Bells will not have to share as much of their broadband data networks. That caused shares of Covad Communications(Nasdaq: COVD) -- which provides high-speed broadband DSL service through leased lines -- to plunge nearly 50%.

The implications of the ruling are far-reaching. Allowing outside companies to rent voice lines would keep downward pressure on prices for your local phone service. But that puts downward pressure on the Baby Bells' margins and might keep them from expanding their networks and adding new broadband services. Less incentive to build out means less business for telecom equipment providers. And with less competition in the broadband arena, DSL prices might rise, which, in turn, could allow cable Internet prices to rise.

To top it all off, the ruling will almost certainly be challenged in court, creating a climate of uncertainty for at least the next couple of years.

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AOL , Microsoft Fight Spam

Hate spam? No, not the mystery meat, but the unwanted commercial emails touting everything from body-part enlargement to home refinancing. Well, you're not alone. AOL Time Warner(NYSE: AOL) and Microsoft(Nasdaq: MSFT) hate it, too, and they've banded together to do something about it.

It might seem an unlikely pairing, but as the two largest Internet service providers in the country, they've got an understandable interest in stopping the growing glut of junk filling up our inboxes. Both AOL and Microsoft offer spam filters and blockers, but like roaches finding ways through cracks, spam still seeps through.

And it's seeping through in increasingly large numbers. According to an upcoming report from Forrester Research, email users receive an average of 110 unwanted emails every week. AOL blocks more junk email than it delivers -- 780 million blocked emails a day! The number of spam has grown fivefold in the past 18 months, and it's not likely to reverse course soon. The cost of delivering it to thousands of people is minuscule, so profiting from it is easy.

The trends are enough for Microsoft and AOL to call foul. They want the government to step in and help out. Harsh jail terms for fraudulent spammers, large fines, and the ability to obtain injunctions against spammers who illegally steal and use email addresses are all on the table. The tech giants would also love to see federal legislation to block spammers.

First Amendment concerns have stymied past efforts to shut out spammers, though. That's why AOL and Microsoft are largely focusing on fraud and theft in their efforts. It's an ongoing battle, and one we're not likely to see resolved anytime soon.

Quote of Note

Wife: Could you do the egg bacon spam and sausage without the spam then?
Waitress: Urgghh!
Wife: What do you mean 'Urgghh'? I don't like spam!
Vikings: Lovely spam! Wonderful spam!
Waitress: Shut up! (Vikings stop) Bloody Vikings! You can't have egg bacon spam and sausage without the spam.
Wife: I don't like spam!

-- Spam Song, Monty Python's Flying Circus

Discussion Board of the Day: AOL Time Warner

Will CNN follow Ted Turned out of the AOL Time Warner family? Is it even worth speculating in terms of who can make a play and how much they would be willing to pay? All this and more -- in the AOL Time Warner discussion board. Only on

Quick Takes

A fire and explosion aboard a barge off New York's Staten Island sent oil prices $1.21 a barrel higher today. As news emerged the explosion was accidental and not a terrorist attack, prices settled back down.

Sotheby's (NYSE: BID) put an end to the bidding today. Because its "financial position has strengthened considerably in recent months," the venerable auction house says it's no longer for sale. Sotheby's has been bogged down by recent legal problems stemming from a price-fixing scheme with rival Christie's(Nasdaq: CTTDY).

Former Treasury Secretary Paul O'Neill is flashing back to Eastman Kodak(NYSE: EK), retaking a seat on its board. He served for four years with the photographic firm before joining President Bush's cabinet in 2001. O'Neill resigned under pressure as Treasury secretary several weeks ago.

The annual Grammy Awards ceremony takes place Sunday night at New York's Madison Square Garden. For a good overview of the changing face of the industry, tune in to our recent music special.

In local news, county officials reversed their decision to ban pets from the annual Founders' Day parade. In order to avoid last year's tragedy, however, dogs and cats must now march at opposite ends of the procession.

And Finally...

Today on

  • For updated stories throughout the day, bookmark our ever-changing News section.
  • Bill Mann reviews a mortgage REIT with a massive dividend -- and likes what he sees.
  • Rumor has it CNN is on the auction block. But it's not making headlines yet.
  • Another loss and more job cuts mark Agilent's Q1.
  • Foolish analysts discuss what it takes to short stocks in this market.
  • Did you know a kid under your roof can save you hundreds in taxes?
  • In Fool's School, we explain efficient market theory and what it means for you.

Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim